New-Home Listings Drop as Construction Hurdles Limit Builders
Last month, listings for newly built homes dropped 4.1% year over year. Just before, in July, those new build listings increased by 3.8%. The drop in newly built homes is not likely due to a drop in demand, but the shortages of workers and construction materials, according to Redfin. Increases in home renovations are adding fuel to the fire for new homes, as the increase in renovations worsens shortages in labor and lumber. On the other hand, existing home sales outpaced new home sales for the first time since 2015 in August.
The supply of newly-built homes for sale sank 33.6% year over year in August to 185,000, while the number of existing homes on the market plunged 38.3%—the largest declines since at least 2013.
The acute dearth of homes for sale, paired with strong homebuyer demand due to record-low mortgage rates, is driving up prices. Newly-built homes sold for a median of $378,000 in August. That’s 4.1% higher than a year earlier, exceeding the pre-coronavirus (February) growth rate for the first time. Meanwhile, existing home prices rose 12.1% to a median of $316,000. Existing homes are typically more affordable, and consequently more desirable for many Americans, explaining the relatively high price growth.